HQ 545417: Internal advice request concerning whether Headquarters Ruling Letter 544525 is applicable for offsetting the overpayment of duties paid on mold charges used for international shipments after the entries have been liquidated and the protest period has expired.

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 545417

                            May 27, 1994

VAL CO:R:C:V  545417 AT

CATEGORY:  Valuation

Regional Director
Regulatory Audit Division
Pacific Region
Long Beach, California

RE:  Internal advice request concerning whether Headquarters
     Ruling Letter 544525 is applicable for offsetting the
     overpayment of duties paid on mold charges used for
     international shipments after the entries have been
     liquidated and the protest period has expired.


Dir Sir:

     This is in response to your request for internal advice
dated August 18, 1993, concerning whether Headquarters Ruling
Letter (HRL) 544525 is applicable for offsetting the overpayment
of duties paid by Avia Group International, Inc. ("Avia") on mold
charges used for international shipments after the entries have
been liquidated and the protest period has expired.  We regret
the delay in responding.

FACTS:

     Avia, a major importer of athletic shoes made payments for
mold charges on various shoe styles.  During the period 1985
through 1989, Avia paid to its foreign manufacturers (sellers),
mold charges on various shoe styles.  According to counsel, Avia
would contract with a seller to share mold charges if production
on a shoe style was halted prior to a predetermined quantity. 
For example, if Avia, having contracted with the seller for
200,000 shoes, halts production after 100,000, then Avia would
share 50% of the mold charges.  If the mold charges were $80,000,
Avia would pay the seller $40,000.  In some cases, shoes were
shipped after payment of mold charges.

     During the period 1985-1989, Avia tendered duty on some of
the mold charges either at the time of entry, or at the time of
disclosure.  However, not all the mold charges were declared. 
For that reason, on May 19, 1992, Avia filed a disclosure covering mold charges from 1985 through 1989.  This disclosure
included a schedule that tabulated mold charges paid to its
sellers.  This schedule shows a total duty payable on those mold
charges of $255,695.79, less the amount paid at the time of entry
of $149, 190.15 for a net liability to Customs of $106,505.64.

     In calculating the duty payment due for this disclosure,
Avia offset their liability of $106,505.64 by $19,796.66.  When
asked to explain this offset, Avia said that it was to correct
previous overpayments to Customs of duty due on mold charges. 
According to Avia, on certain previous declarations and
disclosures of mold charges, the company had not adjusted the
dutiable value by that portion of the mold expense attributable
to international shipments (non-U.S.).   

     Counsel on behalf of Avia claims that the rationale of HRL
544525 is applicable in this case to allow the offset for that
portion of the excess mold charges paid to Customs which were
attributable to international shipments, even though all the
entries have been liquidated and the protest period has expired.

ISSUE:

     Whether the rationale in HRL 544525 is applicable in this
case to allow the offset of excess duties paid by Avia to Customs
for mold charges attributable to international shipments, if all
the entries have been liquidated and the protest period has
expired?

LAW AND ANALYSIS:

     In HRL 544525 (January 31, 1991), Customs ruled that an
importer had not forfeited the option to pro-rate the value of
certain tooling payments due to its failure to declare the
tooling payments at the time of importation, even though some of
the entries had bee liquidated.  In that case, the importer made
tooling payments to the seller during the period 1986-1989.  At
the time of importation, certain of the merchandise was duty-free
under the Generalized System of Preferences ("GSP").  The
importer did not report the tooling payments to Customs until
1989, subsequent to importation.  At that date, some of the
countries from which the merchandise had been imported had been
removed from the list of beneficiary developing countries under
GSP.  The field office contended that the importer should not be
allowed to apportion the tooling payments to any entry which had
been liquidated.  This included all the entries to which GSP
applied.  Headquarters agreed with the importer and permitted the
apportionment of the tooling payments over all relevant entries,
including those which had been liquidated.
     Counsel argues that the rationale of HRL 544525 can be
applied to the instant case allowing Avia to offset their
liability by the amount of excess duties paid to Customs for mold
charges attributable to international shipments, even though all
the entries have been liquidated.  We disagree because our review
of HRL 544525 discloses that it has nothing to do with the facts
presented here.

     The fact remains that all the entries have been liquidated
and the protest period has expired.  Under these circumstances,
we find that there is no legal authority to allow the requested
offset by Avia for the mold charges.  HRL 544525 is only limited
to the circumstances of that case and can not be applied outside
those circumstances to allow an offset of excess duties paid on
entries which have been liquidated.

HOLDING:

     HRL 544525 is not applicable to the facts of this case. 
Therefore, the offset by Avia of current duty based on a claim
that excess duties were paid for mold charges which were
attributable to international shipments on past entries which
have all been liquidated is inappropriate.  

     This decision should be mailed by your office to the
internal advice requestor no later than 60 days from the date of
this letter.  On that date the Office of Regulations and Rulings
will take steps to make the decision available to Customs
personnel via the Customs Rulings Module in ACS and the public
via the Diskette Subscription Service, Lexis, Freedom of
Information Act and other public access channels.


                              Sincerely,




                              John Durant, Director
                              Commercial Rulings Division